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What was the Financial Crimes Network Established to Do?
The Federal Government has created a new agency called the FINCEN or the Financial Crimes Enforcement Network as a part of the Corporate Transparency Act (CTA) that was Included in the National Defense Authorization Act in January 2021. The Act aims to promote transparency and combat money laundering through Reporting Companies.
When is the Beneficial Owners Information Report Due?
As of January 1, 2024, FINCEN is requiring certain types of companies (including ALL LLCs) to declare beneficial ownership information within 90 days of formation or registration. If you formed or registered your company before January 1, 2024, you have until January 1, 2025, to file.
Who must file a Beneficial Owners Information Report?
According to the FINCEN website:
“Companies required to report are called reporting companies. There are two types of reporting companies: Domestic reporting companies are corporations, limited liability companies (LLCs), and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.”
Who is considered a Beneficial Owner?
Reporting Companies must identify Beneficial Owners. A Beneficial Owner is defined as one with "substantial control" or owning 25% or more of the Reporting Company. (Trusts associated with Reporting Companies are also included).
What information must be disclosed?
Reporting Companies must report:
● The full legal name of the company
● Trade names
● Principal place of business
● Jurisdiction of Formation
● and taxpayer ID/EIN
They must also report the Beneficial Owner’s and Company Applicant’s personal information and identification documents. This includes:
● Name
● Date of birth
● Address
● US driver’s license, non-expired US passport, or a non-expired identification document issued by a state, local government, or Indian tribe. An image of the chosen document will also have to be submitted.
Who has access to this information once submitted:
Although you will log in to a secure, confidential portal to submit this information, it is important ot note that the FINCEN will permit federal, state, and local officials (as well as certain foreign officials who submit a request through a U.S. federal government agency), to obtain beneficial ownership information for authorized activities related to national security, intelligence, and law enforcement. (https://www.jdsupra.com/legalnews/fincen-imposes-new-reporting-8106010/)
Other important information:
If there are any changes to the Beneficial Owner information of the Reporting Companies, they must be updated with FinCEN within 30 days of the change.
There are additional considerations for Investment Managers that should be explored including the need to file reports for management companies, general partners, or affiliates and indirect reporting for certain funds invested in private companies.
What happens if a Reporting Company fails to file:
Reporting violations, providing false information, or failing to report may lead to civil and criminal penalties including fines and imprisonment.
How to Report Your Beneficial Owner Information Report:
The reporting process is fairly straightforward and takes approximately 30 minutes.
To report you will log onto https://boiefiling.fincen.gov/
Before you begin, gather your EIN and a picture ID. Any of these will work; a US driver’s license, a non-expired US passport, or a non-expired identification document issued by a state (Driver’s License), local government, or Indian tribe. An image of the chosen document will also have to be submitted.
You will need to take a picture of your I.D. so that you will be able to upload it to the FINCEN site.
Need More Help?
We have created a PDF download of the steps your need to file, with pictures! You can find it here!
If you still have questions, call Selena Fogg CPA at 806-676-2849 for a consultation now!